Labour hire companies: be alert not alarmed

The Fair Work Commission (FWC) has found a labour hire company (the employer) unfairly dismissed an employee after the host employer told the employer it did not want the worker at its workplace.

The worker was placed by the employer at the host employer’s workplace and had been working regular hours there for over two years. The employee was removed from the site at the direction of the host employer, after the host employer formed a view that she had engaged in misconduct associated with irregularities in clocking off from work.

The employer defended the employee’s unfair dismissal claim, saying that it did not dismiss her from her employment, she was a casual employee, and it had tried to redeploy her with alternate host employers.

The FWC found the misconduct unsubstantiated and that management at the labour hire company had simply acquiesced to the employee’s removal from the workplace without any independent verification of the misconduct alleged. Further, the FWC found the labour hire company ‘did little, if anything’ to place the employee with another host employer, and in the circumstances, had dismissed her from her employment without a valid reason.

The FWC noted that where a labour hire employee is placed with a host employer, the end of the placement will ‘generally not constitute dismissal of the labour hire employee’. However, it may be different when the labour hire employee is unfairly removed at the request of the host employer due to the alleged misconduct, capacity or performance of the employee. The FWC stated that unfair actions towards an employee by a host employer ‘do not automatically cease to be unfair because they are carried out by a third party to the employment relationship’.

While the FWC recognised the contract between the labour hire company and the host employer may have required workers to be removed upon request, the FWC remained critical of the labour hire company for the lack of fairness shown to the employee.

The case was not assisted by the self-represented labour hire company failing to understand the extent of issues the FWC would consider at the hearing and failing to lead evidence on critical matters, including the employee’s acceptance of the terms of her employment.

Take away messages for labour hire companies are to:

ensure the terms of labour hire relationships are properly documented in well drafted employment contracts and labour hire agreements;

be aware that removal from placement or failure to offer work may amount to dismissal of casual employees;

act fairly if a host employer complains about conduct or poor performance – the client is not always right;

document genuine attempts to redeploy employees following removal from placement; and

seek legal help when required.

It is common business practice for labour hire companies to agree to the removal of an employee (no questions asked) if requested to do so by a host employer. While this is not necessarily unlawful, this latest decision, which is unlikely to be appealed, and in some respects appears at odds with previous FWC decisions, does suggest care needs to be taken.

If you need assistance with labour hire agreements, unfair dismissal or any other workplace matter, please contact: